Will RFID overtake the barcode?

Every year, RFID adoption picks up the pace, moving into different verticals and finding new applications. The burning question is: will RFID replace the barcode, and if so when? In some industries, RFID is a must-have technology. In retail, for example, it has taken the clothing industry by storm because the return on investment for that vertical is just so good: reducing stock-outs from double digits to less than one percent and taking store inventory counts from 90 hours to three, as examples. Wal-Mart and other mega-retailers are also driving RFID adoption, but for the great majority of retailers RFID hovers somewhere off in the future. So the short answer, according to two opinion leaders in Finland, is yes, RFID will eventually replace the barcode, but not quickly. Jorma Lalla, CEO of Nordic ID, a manufacturer of mobile data collection handsets, explains that the slow pace of adoption is not due the cost of tags: Early in the millennium, research institutes and universities forecasted a revolution in identification of goods within a few years. As we all know, he continues, this didnt happen. Thats because retailers had invested huge dollars in barcode technology. No ones going to reinvest just because theres a new technology available.

Benefits and standards: the driving forces of adoption
Like any technology, the more RFID is used, the more valuable it becomes. In an open supply chain environment, RFID can play a major role in tightening inventory and shipping logistics along the entire chain. Because tags can store item-level information from site and date of manufacture to stock keeping unit (SKU) to transportation and logistics information every item carries a complete, individual history of its journey from manufacture (or harvest) to sale. Taking it a step further, tags can have sensors built in to log moisture, temperature and other parameters over the course of their journey. And because of the robustness of RFID tags and the accuracy and ease of reading them, items can be scanned in bulk, while goods are still in boxes, greatly improving inventory awareness and timing. Security is also a plus, says Lalla. The FDA is having problems with counterfeit pharmaceuticals. RFID tags can have encryption built in an easy way to find the fakes. And if youre looking for a needle in a haystack, try high frequency RFID. Think libraries and music stores.
 
A sticking point for any technology is the development of universal standards. We now have standards for many facets of RFID, including near field communication for payment cards and many industrial applications. Although RFID is currently used to track goods in open supply chains, however, there are still various standards at play. The RFID ecosystem has not yet undergone a VHS/Betamax-style battle royale, but the International Standards Organisation (ISO) is taking a leading role in developing conclusive, comprehensive RFID standards across the board.
 
Beyond inventory
Heikki Sepp, known in European circles as Mr. RFID, believes that we have reached a point of sufficiency in terms of standards. A professor with the VTT Technical Research Centre of Finland, Sepp envisioned RFID technology 20 years ago and helped to bring it into existence. He thinks that existing data content and air interface protocol standards for tag-reader communication are robust and ready for the open market, and hes taking bets on RFID becoming a fixture of the consumer world within 5 years. RFID is the Internet of things, he says. You will soon be able to read product information, service records and more by touching a tag with your smart phone. So much information can be stored on these tags that applications are virtually endless. Take, for example, car maintenance. The vehicles tag shows the details of all previous service, as well as information from the cars own diagnostic system showing whats wrong. This scenario may not yet have made it to the consumer world, but it currently plays out daily in the airline industry, where high-memory tags allow maintenance crews to work effectively even if no WiFi connectivity is available.
 
Consumers will drive adoption
Retailer demand is currently leading adoption of RFID throughout the supply chain, but Lalla thinks that consumer demand will soon drive significant adoption. People are curious, they demand to be informed. Theres already significant interest in knowing the lifecycle of goods. In the grocery store, consumers will be able to scan RFID electronic product codes with their mobile phones and find out about allergens, where and when the product was produced or grown, and more. RFID is going to become a big part of the consumer shopping experience. Staying informed is one driver, but convenience could be another. Shoppers might simply walk past a scanner at the exit; the scanner would read all items in the cart at once and charge the customers account while adjusting the store's inventory.
 
And the homely barcode? Lalla believes it will die a slow death as barcode reading equipment reaches end of life and the cost of RFID tags continues to fall. Lets say Im the retailer, my barcode reader is old and RFID is part of the items. Efficiencies are such that I will not reinvest in barcode. Sepp agrees, but thinks that the barcode may be around for some time. Industries will self-select. Some wont find good reasons to replace the bar code for years and years. RFID tags can carry a barcode, and many stores will adopt combined readers in fact they already exist.
 
Price gap narrows
But many more industries may soon be self-selecting out of barcodes and into RFID as chips increase in functionality while they shrink in price and size. When I worked at Nokia in the 80s, we were making mobile phones that weighed up to ten pounds, remembers Lalla. We thought we were at the peak of development, but our visionary director said that one day they would be very small, quite cheap and everyone would have one. We thought hed gone nuts, but of course it happened, and the same thing has happened with RFID chip technology in the past 10 years. Where you see a barcode today, in the near future you will see an RFID tag.
 
Many RFID readers are less expensive than barcode readers, and new manufacturing processes have driven costs down to pennies per tag. But inexpensive as the technology might become, its more the growing business case that will justify adoption. Five years ago the majority of manufacturers, logistics suppliers and retailers adopted a wait and see attitude. The question, now that the technology has proven its here to stay, is: have they waited long enough?